Renault and Nissan learn from each other

Renault and Nissan executives said their joint purchasing operation has changed production processes as well as saved money.

Because of combined purchasing, Renault adopted Nissan's quality management system and Nissan is following Renault's use of modules in vehicle design, said Jean-Baptiste Duzan.

Duzan is chairman and managing director of the Renault-Nissan purchasing organization.

'Nissan has had a tremendous impact on our quality approach,' said Duzan. 'The [Nissan quality] system is very successful. It has been very well received by suppliers because it is positive and they can [use it to] seek help.'

Renault's quality has already improved in measurable ways, said Duzan.

'We have not reached the Nissan level, but we are on the curve,' he added. 'When we say common suppliers, it means common standards. We can only choose the supplier together if we agree on everything - including quality.'

Meanwhile, Nissan has started using supplier-built modules in designs for future vehicles, said Hiroto Saikawa, executive general manager of the purchasing group.

'It will dramatically change the purchasing job,' said Saikawa. 'At the moment, the technical policy for the module is not necessarily the same between Renault and Nissan, which makes the purchasing job somewhat different.'

But Renault saw how Nissan's close relationship with suppliers such as Calsonic Kansei helped it switch to modules quickly, Duzan said.

'I think Renault will use this experience from Nissan,' he said.

Renault and Nissan formed the joint purchasing system in April 2001 with an initial target of 30 percent common purchases. The French and Japanese carmakers hope to reach a level of 70 percent eventually. Renault owns 44.4 percent of Nissan and Nissan holds 15 percent equity in Renault.

After a year, the 80-person joint purchasing group achieved its initial objectives and is currently doing 'better than expected,' Duzan said.

Two global supplier account managers in Paris and Tokyo are 'the core of the operation,' said Saikawa. They are responsible for purchasing strategy and sourcing nominations and decisions, plus the performance review and assessment of suppliers. The account managers and the rest of the joint purchasing operation must also work with Renault and Nissan product and manufacturing engineering in France and Japan.

'We had some physical communication difficulties,' Saikawa said. 'But in general they are doing fine.'

Renault and Nissan's early shared purchasing activities included engine and engine-control system parts, brakes, wheels, tires and suspension parts.

The combined purchasing organization could mean extra business for French and Japanese suppliers.

'If [current Renault suppliers] have the capability, the competitiveness and interest to expand outside France or outside Europe, then there is opportunity,' Saikawa said. 'If current Nissan suppliers are interested in expanding their business with Renault, they have the opportunity. There is both risk and opportunity.'

Renault and Nissan are not simply reducing the number of suppliers through joint purchasing.

'In some cases, we end up picking competitive suppliers and reducing the number of small-volume suppliers, and sometimes we may have to introduce new suppliers for us to be competitive,' Saikawa said. 'The important thing is to have a global view.'

Duzan said when the joint purchasing group was formed some Japanese suppliers feared that it would simply pick European or global suppliers.

'I think these fears were wrong, because Renault has introduced quite a few excellent Japanese suppliers, probably as much as the other way around,' he said.

The combined purchasing organization is working better than expected, Duzan said.

He added: 'Renault was smaller than Nissan and admired Nissan in many respects, so nobody imposed this or that. The humble start probably helped a lot, because the cultures were very different. But we are happily surprised.'